For decades, the leading cryptocurrency attracted investors with a simple proposition: high volatility in exchange for the opportunity to earn more than in traditional markets. Now this rule is breaking down. US stocks are rising faster, crypto exchanges are leaving the market, miners are shifting to artificial intelligence, and the influx of institutional capital has yet to restore Bitcoin’s former momentum.
Until recently, comparing Bitcoin with stock indices seemed almost like a formality. The leading cryptocurrency could fall sharply, endure prolonged drawdowns, and test investors’ resolve, but during growth periods it usually left traditional assets far behind. The market rewarded risk with substantial returns.
In 2026, this familiar model stopped working. Over the past three months, Bitcoin outperformed the S&P 500 Index* in only 37.8% of trading sessions. In other words, the US stock market delivered better results in almost two out of every three sessions. According to Glassnode, BTC has not experienced such prolonged and pronounced underperformance in six years.
* The S&P 500 Index is one of the main indicators of the US stock market. It reflects the combined performance of the shares of approximately 500 of the largest publicly traded US companies, including Microsoft, Apple, Amazon, Nvidia, and JPMorgan Chase. The higher a company’s market capitalization, the more strongly its share price movements affect the index. The S&P 500 is often used as a benchmark when comparing the performance of different assets.
A few successful days do not change the overall picture. Bitcoin can still gain value quickly and occasionally outperform stocks, but such episodes are becoming the exception rather than the rule.
The trend developed gradually. In 2023 and early 2024, Bitcoin outperformed the S&P 500 on approximately 50–60% of trading days. In 2025, the figure fell below half more often before declining to its current level of 37.8%.
For a traditional asset, such underperformance would be unpleasant but not necessarily alarming. For Bitcoin, however, it challenges the very logic behind investing in it. BTC holders continue to accept sharp price fluctuations, yet they are increasingly less likely to receive returns above those of the stock market in exchange for that risk. The premium that once justified the cryptocurrency’s volatility has declined significantly.
The main question remains unanswered: is this a temporary market anomaly or a new reality in which Bitcoin will compete with stocks on nearly equal terms while retaining a substantially higher level of risk?
Investors’ money has moved to Wall Street
If we move away from comparing individual trading sessions and look at performance from the beginning of 2026 through mid-August, the gap becomes even more apparent. During this period, Bitcoin lost almost 27%. Meanwhile, the S&P 500 gained 14%, the Nasdaq Composite* rose by 19%, and gold increased by approximately 2%.
* The Nasdaq Composite Index includes the shares of several thousand companies traded on the Nasdaq exchange. Technology companies account for a particularly large share of the index, making it highly sensitive to changes in the valuations of the largest IT companies.
What makes the situation unusual is not merely BTC’s decline. In the past, Bitcoin often moved in the same direction as technology stocks, the broader US market, or gold. Now traditional instruments are rising in value, while the leading cryptocurrency remains excluded from this growth.
In terms of relative performance, Bitcoin’s current position resembles the beginning of 2022. At the time, the market was on the verge of a prolonged crypto winter that culminated in the collapse of FTX and a chain of bankruptcies involving major industry participants.
No direct equivalent of the FTX catastrophe has emerged in 2026 so far. Nevertheless, the combination of current problems has already led some to describe this period as one of the most difficult in the history of the crypto market. The industry is contracting not because of a single high-profile event, but across several areas at once: trading activity and mining profitability are declining, platforms are shutting down, and companies are looking for revenue outside digital assets.
Crypto exchanges are closing one after another
July 2026 was particularly difficult. In a single month, at least five cryptocurrency exchanges announced their closure, bankruptcy, or liquidation.
One of the most notable losses was BitMEX, a platform that had operated since 2014 and was well known among crypto derivatives traders. Around the same time, BitMart, which had previously ranked among the twenty largest exchanges by trading volume, announced it was ceasing operations.
AscendEX stopped operating on July 1. Two weeks later, on July 16, a court declared the Dutch platform Knaken bankrupt. EXMO, one of Eastern Europe’s oldest crypto exchanges, which began operating in 2014, also joined the list of closed projects.
The market contraction was not limited to these names. About 100 other prominent crypto companies ceased operations at the same time. The scale of these developments shows that this is not about isolated mistakes by individual platforms, but about a deeper restructuring of the entire industry.
When user interest weakens and trading volumes decline, exchanges find it harder to operate on a crypto-only model. As a result, they are increasingly adding stocks, commodities, and tokenized equivalents of traditional financial instruments. Platforms that once built their businesses exclusively around digital assets are gradually transforming into universal trading services.
Their clients’ behavior is changing as well. Retail crypto traders are showing growing interest in stocks — a shift that would have seemed almost unimaginable just a few market cycles ago. Capital now flows to wherever there is momentum, and an asset’s affiliation with the crypto market no longer gives it an advantage by itself.
Miners have found a more profitable client
The changes have affected more than just trading platforms. Bitcoin miners, who until recently embodied the physical infrastructure of the crypto economy, have begun restructuring their businesses around artificial intelligence workloads.
Large mining companies already possess what AI developers need most today: connected power capacity, cooling systems, land, and access to grid infrastructure. These sites can be transformed into high-performance computing centers, although simply replacing a few pieces of equipment is not enough. ASIC devices are designed for cryptocurrency mining and are unsuitable for training or serving AI models, so they are being replaced with servers equipped with graphics processing units.
The economic reason for this transition is simple. Mining profitability is declining, while demand for AI computing capacity continues to grow. Instead of waiting for another cryptocurrency boom, infrastructure owners can offer their resources to a market that is already willing to pay for them.
Bitfarms, one of North America’s largest publicly traded miners, provides a telling example. Known for its industrial facilities and heavy reliance on hydropower, the company rebranded as Keel, stopped mining Bitcoin at its US sites, and began converting them for AI projects.
As a result, the crypto industry is losing part of its own infrastructure at precisely the moment when it most needs a new source of momentum. Miners are not necessarily abandoning Bitcoin altogether, but they increasingly see it as one possible revenue source rather than the foundation of their businesses.
ETFs, government support, and the rally that never happened
The current underperformance looks particularly strange against the backdrop of developments over the past two years. From the standpoint of regulation and access for institutional investors, conditions for Bitcoin have arguably never been better.
In early 2024, the United States approved Bitcoin-related exchange-traded funds. Thanks to Bitcoin ETFs*, investors gained the ability to participate in BTC trading through a conventional brokerage account without purchasing cryptocurrency directly or dealing with its storage.
* A Bitcoin ETF is an exchange-traded fund whose value is linked to the price of Bitcoin. Investors buy and sell its shares on a traditional stock exchange. Investors gain exposure to changes in the price of the leading cryptocurrency without having to create a crypto wallet or store BTC themselves.
The market expected regulated funds to open the door to major capital: pension and investment funds, asset management companies, and other organizations that had previously found it difficult or impossible to work directly with cryptocurrency. The assumption was that a steady inflow of money through ETFs would create additional demand and provide long-term support for the price.
The new US presidential administration, which took office in early 2025, reinforced this optimism. Industry participants expected reduced regulatory pressure, clearer rules for digital assets, and easier interaction between crypto companies and banks. Another major expectation was the abandonment of the practice whereby market rules were effectively established through litigation.
More ambitious measures were also discussed: support for US mining, the development of blockchain projects, the adoption of dedicated legislation, and the recognition of Bitcoin as a government reserve asset. Some of these expectations became reality. However, institutional recognition did not provide the fuel needed to restore BTC’s former advantage over traditional markets.
This is the paradox of the current cycle. Bitcoin received the regulated investment instruments and political support that cryptocurrency advocates had discussed for years. Yet as it moved closer to Wall Street, it did not outperform it—on the contrary, Bitcoin began to fall behind.
The risk remains, but the excess returns have disappeared
Over a longer time horizon, Bitcoin’s position looks less dramatic, although its former exceptionalism is still nowhere to be seen. Since 2021, BTC has appreciated by approximately 120%. Over the same period, gold and the Nasdaq gained more than 130%, while the S&P 500 rose by around 105%.
The leading cryptocurrency therefore delivered strong returns but failed to pull decisively ahead of either technology stocks or gold. At the same time, Bitcoin holders endured much sharper price fluctuations than investors in most traditional instruments.
The relationship between risk and return has become the cycle’s main disappointment. A 120% increase looks impressive on its own. But if comparable or higher returns could be obtained in a regulated market with lower volatility, BTC’s investment appeal no longer seems unconditional.
The difference used to be obvious. In 2017, Bitcoin’s price increased by more than 1,300%, and in 2020 it rose by over 300%. Against the backdrop, crashes were seen as the price investors paid for the chance to multiply their capital.
Repeating such rallies is becoming increasingly difficult. Bitcoin’s market capitalization has grown, and so has the amount of money required to produce another severalfold increase. A relatively limited influx of capital can rapidly drive up a small market. A large global asset requires demand on an entirely different scale.
This does not mean that Bitcoin has lost its ability to rise quickly. Glassnode draws attention to a different point: BTC’s excess returns relative to traditional instruments are declining over time. The cryptocurrency is maturing and becoming part of the financial mainstream while simultaneously losing the characteristics of an asset that once followed its own rules.
Bitcoin has become more familiar — and that is its new problem
Institutionalization was supposed to stabilize the market and bring more money into it. To some extent, it has. But closer integration with traditional finance has also had a downside: Bitcoin is increasingly being judged by the same criteria as stocks, gold, and other investment instruments.
Recognition alone is no longer enough. Investors compare returns, volatility, liquidity, and alternative opportunities. If stock indices rise faster while carrying less risk, capital has no reason to choose cryptocurrency solely because of its history or its status as “digital gold.”
It is still too early to say that the era of Bitcoin’s excess returns has ended for good. The crypto market has repeatedly emerged from prolonged downturns and surprised observers with the speed of its recovery. However, the current situation differs from previous cycles: all the main conditions for growth appear to be in place, yet Bitcoin’s growth still hasn't outpaced the traditional market.
Perhaps this is precisely what Bitcoin’s maturation looks like. It has become larger, more accessible, and easier for institutional investors to understand — but in the process, it has lost some of its former exceptionalism. The high risk has not disappeared, while the reward for taking it is becoming increasingly difficult to see.